TCL's Li doubles down on global markets, nudges Qualcomm on fees

BEIJING, March 10 TCL Corp expects
group revenues to surpass 100 billion yuan ($16.32 billion) this
year for the first time as the Chinese electronics giant
increasingly turns to Europe, Latin America and the United
States to sell more smartphones and televisions.

TCL expects to see sustained revenue growth at its handset
company, now the world's fifth-biggest, while profits at its
television unit are expected rebound, company chief executive
Thomson Li Dongheng told Reuters.

Li also called on Qualcomm Inc., the U.S. chipset
maker, to lower the fees it charges Chinese companies.

"We have to be more competitive and speed up the
transformation of the television business," Li said in an
interview on the sidelines of China's annual parliamentary
session in Beijing. Li said revenue for the TV set business
should increase about 10 percent this year.

TCL is targeting international markets, which now account
for 42 percent of total sales, as cheaper technology makes
Chinese-made electronic goods affordable in both emerging and
developed markets. The percentage of global sales is expected to
increase, Li said.

TCL reported group revenue last year reached 85.32 billion
yuan, an increase of 22.9 percent, while net profit jumped to
2.88 billion yuan.

TCL Communication Technology Holdings, the group's
Hong Kong-listed handset maker, makes more than 90 percent of
its revenue offshore, primarily in the Americas and Europe.

Last year, TCL purchased the rights to rename Grauman's
Chinese Theater, along Hollywood's Walk of Fame in Los Angeles,
the TCL Chinese Theatre..

Handset sales in 2013 reached 55.2 million units, including
17.6 million smartphones, and have been a main driver for the
company since last July. TCL Communications, which sells under
the Alcatel brand overseas, also competes against Huawei
Technologies Co, ZTE Corp and Lenovo Group
.

"We remain concerned about how the company can cope with
mounting smartphone margin pressure in both emerging and matured
markets," wrote Andrew Hsu, an analyst with J.P. Morgan
Securities (Asia Pacific) Ltd in a research note last month.

"Chinese companies are becoming more competitive. There are
five Chinese brands in the world's top ten, but our
profitability is poor compared with Samsung or Apple," Li said.
"Chinese firms do better against brands like LG, Nokia and
Motorola."

The TCL chief also said he supported efforts by China's
anti-monopoly regulator to help lower the license fees on
chipsets paid to Qualcomm Inc.

"Qualcomm's patent fees, frankly speaking, are relatively
high," said Li. "Our profits last year were only a little more
than 1 percent. It's clear this standard isn't reasonable."

TCL on average paid royalty fees amounting to 5 percent of
sales for chipsets used in its 3G and 4G handsets.

China's National Development and Reform Commission, which in
November started investigating Qualcomm's rates, said in
February that the San Diego-based firm was suspected of
overcharging and abusing its market position.

Li said a more suitable level for all mobile royalties would
be 3 percent.

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